SIDDHESHWAR INDUSTRIES PVT. LTD.,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,

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ITA 760/PUN/2016Status: DisposedITAT Pune20 April 2022AY 2008-099 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that proceedings under Section 153A are not meant for making fresh claims unrelated to undisclosed income found during search. The claim for deduction under Section 43B was not part of the incriminating material found during the search or related to the disclosed income.

What were the facts?

The assessee claimed a deduction of Rs. 2,95,00,000/- under Section 43B in a revised return filed under Section 153A. This claim was based on payments related to statutory dues disallowed in an earlier assessment year. The CIT(A) disallowed this claim, holding that Section 153A proceedings are not for making fresh claims.

What were the issues?

Whether a fresh claim for deduction under Section 43B can be made in a return filed in response to a notice under Section 153A, when the original assessment proceedings have concluded and the claim is unrelated to incriminating material found during search.

Which sections of the Income-tax Act were involved?

Section 43B,Section 153A,Section 132(4)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(6)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI

For Appellant: Shri Hari Krishan
For Respondent: Shri Piyushkumar Singh Yadav
Hearing: 09.03.2022Pronounced: 20.04.2022

ORDER

PER INTURI RAMA RAO, AM:

1.

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 12, Pune [‘CIT(A)’ for short] dated 23.10.2015 for the assessment year 2008-09.

2.

The appellant raised the following grounds of appeal :- “1. In the facts and circumstances of the case and in law, the learned C.I.T. [A] 12 has erred by wrongly enhance the amount of Rs.2,95,00,000/- by disallowing the claim of deduction u/s 43B in revised return of income filed u/s 153A of the I T Act. The aforesaid addition being arbitrary, perverse, based on surmises and conjecture C.I.T. [A] enhance the same. The impugned enhance addition may please be deleted.

2. The appellant denies his liability to pay any interest u/s 234 B and 234 C of the I.T.Act 1961 and hence the same may please be deleted.

3. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”

3. At the outset, there is a delay of 95 days in filing the present appeal. The assessee filed an affidavit stating that one Mr. Mahesh Jagdale earlier Accountant of the appellant company, who was entrusted with the responsibility of looking after the income-tax matter received the order of the ld. CIT(A) on 17.11.2015, left the company on 31.12.2015. The new Accountant who was appointed in his place in the month of January, 2016 had come to know that the appeal against the ld. CIT(A)’s order was not filed then the appeal is immediately filed with the delay of 95 days on 20.04.2016. An affidavit from the new Accountant also filed to this effect. Thus, it was submitted that the delay in filing the present appeal was neither deliberate nor intentional and the assessee had not gained anything on account of delay in filing the present appeal. Thus, it is prayed that delay should be condoned.

4.

On the other hand, ld. CIT-DR has no serious objection in condoning the delay of 95 days.

5.

Considering the fact that the delay had occurred on account of change of Accountant which is beyond the control of the assessee, it is a fit case to condone the delay of 95 days. Accordingly, we condone the delay of 95 days and admit the appeal for adjudication. 6. Briefly, the facts of the case are as under : The appellant is a private limited company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing of spare parts and engineering goods. The return of income for the assessment year 2008-09 was filed on 30.09.2008 declaring total income of Rs.9,58,977/-. Subsequently, search and seizure operations u/s 132 of the Income Tax Act, 1961 (‘the Act’) were conducted in the business and residential premises of the appellant on 27.09.2010. During the course of search and seizure operations, certain incriminating material was stated to have been found. The statement of the appellant was recorded under the provisions of section 132(4) of the Act, wherein, it is stated that the appellant had made gross disclosure of Rs.10,72,84,798/- which inter-alia include disallowance of statutory dues u/s 43B of the Act.

In the return of income filed in response to notice u/s 153A for the assessment year under consideration, the appellant had claimed a sum of Rs.2,95,00,000/- as deduction while offering disallowance of Rs.1,16,13,421/- u/s 43B. The said claim of allowance of section 43B was made on the basis of payment Rs.2,95,00,000/- relating to disallowance of statutory dues u/s 43B for assessment year 2006-07 stated to have been offered to tax in the return of income in response to notice u/s 153A of the Act. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Central Circle- 2(3), Pune (‘the Assessing Officer’) vide order dated 28.03.2013 passed u/s 143(3) r.w.s. 153A of the Act accepting the claim for deduction u/s 43B of Rs.2,95,00,000/- and making addition on account of rental income of Rs.6,67,926/- on account of change of head of income of ‘rental income’.

7.

Being aggrieved by the action of the Assessing Officer, an appeal was filed before the ld. CIT(A) contending that the income from rental income should be assessed under the head “income from house property” not under the “business income”. The ld. CIT(A) while dismissing this ground of appeal

following its earlier orders for earlier years had noticed that the appellant made a fresh claim in 153A of the Act in the form of claim for allowance of deduction u/s 43B on payment basis of Rs.2,95,00,000/-, issued a show-cause for enhancement. The appellant also filed an explanation as to how the claim of the assessee was allowable. The ld. CIT(A) placing reliance on the decision of the Hon’ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT, 259 CTR 281 and the decision of Co- ordinate Bench of the Tribunal in the case of Shankar R. Jhunjhunwala, dated 31.07.2012 held that the proceedings u/s 153A are not meant for the benefit of the appellant and no fresh claim can be allowed in the return of income filed in response to notice u/s 153A of the Act. Accordingly, he disallowed the claim made for deduction of Rs.2,95,00,000/- on payment basis u/s 43B of the Act.

8. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us.

9. The ld. Counsel for the assessee submitted that when the disallowances u/s 43B are part of the disclosure made u/s 132(4) of the Act, the appellant had complied with the disclosure made u/s 132(4) by offering sum of Rs.10,72,84,798/-, the amount so offered to tax in the earlier year should be allowed as deduction in the year of payment as stipulated under the provisions of section 43B of the Act. He also taken us through the copies of the statement recorded from one Shri Raviraj Vikas Takawane u/s 132(4) placed at page no.1 to 14 of the Paper Book. He also placed reliance on several judicial precedents.

10. On the other hand, ld. CIT-DR contended that no fresh claim can be made in the return filed in response to notice u/s 153A of the Act. The assessment u/s 153A should be based on only incriminating material found as result of search and seizure operations. The claim for deduction u/s 43B is not a part of disclosure made by the assessee u/s 132(4) of the Act. Thus, ld. CIT(DR) submitted that the enhancement done by the ld. CIT(A) is correct and should be upheld.

11.

We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowability of a fresh claim made in the return of income filed in response to notice u/s 153A of the Act. Admittedly, in the present case, the original assessment proceedings stands concluded. Thus, there is no abatement of the assessment proceedings for the year under consideration. The Hon’ble High Court while interpreting the provisions of section 153A held that the proceedings u/s 153A shall not be valid unless it is based on the material found as result of search and seizure operations conducted u/s 132 of the Act. Reference in this regard can be made to the following judgements :- (i) CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., 374 ITR 645 (Bom.-HC). (ii) CIT vs. Kabul Chawla, 380 ITR 573 (Delhi-HC). (iii) CIT vs. SKS Ispat & Power Ltd., 398 ITR 584 (Bom.-HC). (iv) CIT vs. Deepak Kumar Agarwal, 398 ITR 586 (Bom.-HC).

12.

As a corollary, it follow that no fresh claim unrelated to the undisclosed income can be made in the return of income filed in response to notice u/s 153A of the Act. Even the Hon’ble Jurisdictional High Court in the case of CIT vs. Gurinder Singh Bawa, 386 ITR 483 has laid down that the provisions of section 153A cannot be tool to have a second inning of assessment either to the revenue or the assessee. Even the decision of the Hon’ble Rajasthan High Court relied upon by the ld. CIT(A) in Jai Steel (India) (supra) held it to the same effect. Similar findings have been given by the Co-ordinate Bench of this Tribunal in the case of

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